Fiamma likely to challenge immediate overhead resistance

Business Times

FOLLOW-THROUGH technical rebound on the Wall Street and Tokyo stock markets helped share prices on Bursa Malaysia edge higher last week.

The FTSE Bursa Malaysia KLCI (FBM KLCI) hit its intra-week high of 1,887.54 before closing at 1,885.72 points last Friday, with a week-on-week gain of 0.48 per cent.

On the index, 16 out of the 30 heavyweight counters posted week-on-week gains with the FBM KLCI closing at 1,885.72 last Friday.

The benchmark index hit an intra-week low of 1,870.10 last Monday before staging a technical rebound to its intra-week high of 1,887.54 on Friday last week , with an intra-week trading
range of 17.44 points and a week-on-week gain of 8.98 points, or 0.48 per cent.

The FBM Small Cap Index gained 1.31 per cent, to 17,883.26 points while, the FBM ACE Index gained 190.46 points, or 2.87 per cent, to 6,826.51 last Friday.

Overall market sentiment on the New York Stock Exchange strengthened further last week. The Dow closed at 16,947.08 points last Friday, with a week-on-week gain of 171.34 points, or 1.02 per cent.

The tech stock-heavy Nasdaq Composite Index moved in sync with the broader market sentiment, closing higher at 4,368.04 points last Friday, with a week-on-week gain of 1.33 per cent.

On the home front, Fiamma Holdings Bhd staged a technical rebound.

The company’s daily price recovered to close at RM1.96 last Friday, with a week-on-week gain of five sen, or 2.62 per cent.

The following are the readings of some of Fiamma’s technical indicators:

Moving Averages: Fiamma’s daily price trend stayed above all its 10-, 20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index stayed above its neutral reference line last week.

On Balance Volume (OBV): Its short-term OBV stayed above the support of its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI had since stayed above 50 per cent. Its technical reading stood at 65.07 per cent.

Outlook

Continued rebound on the Wall Street and the Tokyo stock market sent share prices on Bursa Malaysia marginally higher.

On the scoreboard, 16 out of the 30 heavyweightslisted on the benchmark index staged technical rebound in edging FBM KLCI closer to its all-time historical high of 1,889.47 on May 19.

Select second and third liners emerged with some interesting market plays. Fiamma was one of these counters, with a week-on-week gain of five sen, or 2.62 per cent.

Chartwise, Fiamma’s monthly price trend staged a decisive technical breakout of its intermediate-term downtrend and continued to stay above its intermediate-term uptrend support at the market close on Friday.

Its weekly price trend staged an overhead breakout of its intermediate-term downtrend (See Fiamma’s weekly price chart — B3:B4) last Friday. It continued to stay above its intermediate-term uptrend (B1:B2) on Friday last week .

The stock’s daily price trend staged a successful re-test of the support of its intermediate-term downtrend (See daily price trend — C1:C2) and stayed well above it at the market close last week.

Its daily, weekly and monthly fast MACDs (moving average convergence divergence) continued to stay above its respective slow MACDs .

The stock’s 14-day RSI stood at 65.07 per cent on Friday last week .

On the index last week, Fiamma’s 14-week and 14-month RSI held steady at between 62.29 per cent and 67.03 per cent, respectively.

The decisive technical breakout of its intermediate-term downtrend (C1:C2) on its daily price chart augurs well for its near-term perspectives.

Fiamma’s price trend is now poised to move towards its immediate overhead resistance zone, which is likely to be at between RM2.00 and RM2.35.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.

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